Leasehold Reform: Law Commission Publishes Report on Enfranchisement

The Law Commission has today published a detailed report on their findings, recommendations and proposals for Leasehold Enfranchisement Reform following a lengthy consultation process which lasted for around two years.

Leasehold Enfranchisement includes the right for leaseholders of flats or houses to purchase the freehold of their building, or to extend their Lease.

The full report makes a total of 102 recommendations, and includes some rather drastic changes to the current law, which is considered by many commentators to be archaic, and to be drafted heavily in favour of Landlords. Whereas under the current regimes the qualifying leaseholder of a house has a right to extend their Lease by 50 years, and the qualifying leaseholder of flat can extend their Lease by 90 years, the proposals suggest that a right to extend by 990 years would be more appropriate in both cases. The Law Commission considers that such an extension will place the vast majority of the home’s value in the hands of the leaseholder, and that their proposed new system will also remove traps which can cause claims to fail, and which enable unfair procedural or tactical advantages for Landlords with experience of the system.

Interestingly, the report has also recommended an entirely new right which hasn’t been available to leaseholders before, being a right for them to ‘buy out’ the annual Ground Rent which is currently payable under their Lease, without the need to extend their Lease at the same time.  Recommendations are also made in relation to the calculation of premiums, with the Law Commission suggesting different methodology in order to ensure that those calculations are regularised and clear.

It is widely accepted that the there is an urgent need for reform in this area, and the proposals will provide a huge relief to thousands of leaseholders across the country, as well as potentially providing a much needed boost to the housing market. Although the recommendations will need to be considered and approved by the Government before becoming law, it is clear that the Law Commission’s comprehensive review marks a huge step towards making the enfranchisement system much fairer for leaseholders.

A link to the full report is here, and we will continue to closely review, and provide updates on, any progress which is made towards putting the proposals into place.

In the meantime, if you have any questions in relation to Lease Extensions or Enfranchisement, please don’t hesitate to contact either James Gostling or Elad Yasdi in our Real Estate & Projects team.

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